SelectQuote Faces Legal Battles as DOJ Investigates Medicare Practices

SelectQuote Inc. (NYSE: SLQT), a prominent digital insurance platform specializing in Medicare Advantage plans, finds itself in hot water following a whistleblower lawsuit that caught the attention of the U.S. Department of Justice (DOJ). This intervention has put SelectQuote under intensified scrutiny, leading to a considerable decline in its stock price and class action lawsuits from investors.

Background of the Case

The DOJ's involvement was triggered by allegations that SelectQuote engaged in deceptive sales practices, misrepresenting its services to potential customers. Reports suggest that the company not only promoted its offerings as providing “unbiased advice” and “neutral plan comparisons,” but also directed clients towards insurers that provided them with higher commissions.

The class action lawsuit, known as Pahlkotter v. SelectQuote Inc. et al., encompasses investors who bought shares of SelectQuote from September 9, 2020, until May 1, 2025. The core allegations revolve around claims that SelectQuote misled investors about their business model and the regulations they had to comply with, resulting in substantial financial losses for many investors.

Legal Allegations

Central to the lawsuit are accusations that SelectQuote accepted illegal kickbacks to promote certain insurance plans and violated federal laws, including the False Claims Act. It is claimed that between 2016 and 2021, the company reportedly received tens of millions in improper financial incentives. Further, it is alleged that SelectQuote edged out less profitable customers by steering them away from lower-margin options, in direct contradiction to the “unbiased” service they advertised.

The fallout from these allegations has been dramatic. Just weeks after the DOJ's announcement, SelectQuote's shares plummeted nearly 20% in a single trading session, a particularly alarming statistic for investors who had relied on an optimistic outlook regarding the company’s future.

Investor Reaction and the Market Response

Following the DOJ's involvement, SelectQuote saw a dramatic decline in its stock performance. Over the last six months, the shares have dropped more than 40%. Investor confidence has been deeply shaken, with many questioning the integrity of the company’s revenue claims and its reliability as a viable investment.

Statements made by the company in previous quarters suggesting stable growth have now come under scrutiny, as analysts believe these assurances may have concealed serious risks associated with SelectQuote’s sales strategies.

Hagens Berman, the law firm representing the investors, is currently investigating claims of potential revenue manipulation and deceptive practices that may have inflated select metrics within the company, further adding to the gravity of the situation. Reed Kathrein, a partner at the firm, noted, “The DOJ's intervention transforms this from a routine business dispute into a serious federal matter. We’re examining whether SelectQuote's so-called ‘unbiased’ model was merely a façade for a kickback-driven sales engine.”

The Role of Whistleblowers

In light of these unfolding events, the firm is also encouraging whistleblowers—individuals possessing insider information about SelectQuote—to come forward. The SEC Whistleblower program offers incentives for those who share valuable information that could bolster cases against companies misbehaving in their practices. Whistleblowers may receive up to 30% of any recovery amount from the SEC.

Conclusion

The legal issues plaguing SelectQuote serve as a potent reminder of the potential pitfalls inherent in the insurance industry, particularly in sectors dealing with vulnerable populations such as Medicare recipients. Investors who have faced losses during this tumultuous period are urged to get in touch with legal representatives, potentially reclaiming lost funds if the evidence supports their claims. As the investigation unfolds, the long-term repercussions for SelectQuote and its investors remain to be seen, but one thing is clear: trust and transparency in the insurance sector are more crucial than ever.